27 April 2023

Earlier this year The Charity Commission for England and Wales published its decision following an inquiry into The Ashley Foundation, a charity founded in 1997 to provide support and accommodation to homeless people. The Commission concluded that there had been “serious misconduct and/or mismanagement in the administration of the charity” by three of its trustees, including the founder Lee Dribben and his son Ashley Dribben, both of whom have now been disqualified as trustees of all charities in England and Wales for 15 years. While this is an English case, the facts of the case are relevant to Scottish charities.

The charity was initially brought to the attention of the Commission due to concerns relating to its involvement in various property transactions. Lisa Edwards, a newly appointed trustee, also reported concerns of payments made to the founder totalling £840,000 to reimburse expenditure on his personal account. Throughout the inquiry, the Commission investigated the trustees’ failure to manage conflicts of interest, the misuse of charity assets, an apparent admission of bribery and the lack of effective financial management and controls required to protect charity assets.

The Commission’s decision identifies significant failings within the charity’s management, ultimately leading to the disqualification of trustees and offers key lessons for all charity trustees.

Conflict of interest, Financial risk & breach of director’s duties

In 2017, charity minutes indicated an original plan that the charity enter into sale and lease back agreements for 3 properties. Instead, they entered into sales and subsequent management agreements with a tenant company of these properties. Despite failing to take legal advice on the contracts, records show Lee Dribben advising the board that there was “no distinction” to be made between this and the original sale and lease back arrangements.

The Commission commented that not only were the terms of the management agreements “onerous and exposed the charity to potentially significant financial liabilities”, but there was no viable mechanism by which the charity could withdraw from the agreements which carried a fixed term of 20 years.

The Commission also concluded that Ashley Dribben had profited from the sale of the properties by virtue of his position as director of the company, receiving payment of £40,000. This was a clear breach of his legal duties not to receive benefits from third parties arising from his role as officer of the company.

These failures highlight the need for those acting as trustees and directors of companies with charitable status to be aware of their legal duties in both capacities. 

Misappropriation of charitable funds

The Commission reports that charity funds had been paid over to Lee Dribben’s personal bank account to reimburse the purchase of luxury items including Apple watches and a spymaster system. When the Commission questioned Mr Dribben on this, he attempted to justify the reimbursements with an apparent admission of bribery, explaining that the luxury items had been gifted to “people that would be of help to us in the future”. It was also uncovered that charity money had been used to fund maintenance costs at properties personally owned or occupied by the now disqualified trustees or owned by companies in which they held an interest.

The inquiry also identified various expenses claims which it described as “excessive” and “which could not be considered to be in the best interests of the charity” including among others, a three-night trip to London for four costing the charity over £3000.

To protect against such misuse of charity assets, it is vital for charities to establish and enforce clear policies on the reimbursement of only reasonably and properly incurred expenses.

Lack of financial controls

The Commission concluded that the Chair, David Kam (who has since been disqualified as a charity trustee for 10 years) had failed to properly supervise the charity’s spending following evidence showing he had signed blank cheques.

Furthermore, the inquiry revealed that payments due to the founder personally, had been processed through the charity’s bank account and repaid out to him. The Commission identified this practice as highlighting the “lack of separation between the charity and the private interests of Lee Dribben”.

Lessons to be learned

The Commission’s decision serves as a reminder to all charity trustees of the importance of managing conflicts of interest and establishing effective financial and administrative controls to protect charity assets.

The inquiry also highlights the need to seek professional advice in respect of contracts to be entered into by the charity to ensure favourable terms are obtained and to protect against risks of financial loss.

Finally, whilst the inquiry exposed extreme examples of bad practice among the foundation’s trustees, particularly the actions of its dominant founder, newly appointed trustee Lisa Edwards’ actions are praised and offer a good practice response to such a difficult situation. As the report notes, she played a crucial role in correcting the mismanagement of the charity which the Commission reports has now been “restored to a secured footing”.

The Commission’s full decision can be found here: Charity Inquiry: The Ashley Foundation - GOV.UK (www.gov.uk)

Emily Couchlin, Solicitor: eco@bto.co.uk / 0141 221 8012

Jeremy Glen, Partner: jsg@bto.co.uk / 0141 221 8012